The price of Ethereum (ETH) surged over 16% on Monday, driven by growing speculation about the approval of a spot Ethereum ETF.
This speculation was sparked by a statement from Bloomberg’s senior ETF analyst, Eric Balchunas, who raised his odds of spot ETF approval from 25% to 75% on his X handle.
Balchunas considered a trusted source in the crypto ETF space, noted, “James Seyffart and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (an increasingly political issue), so now everyone scrambling (like we everyone else assumed they’d be denied).”
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The ETF analyst’s statement quickly made waves in the crypto market, causing ETH’s price to skyrocket over 10% within minutes. As of the time of writing, ETH is trading at $3,760. Despite the market excitement, the SEC has remained silent on approving ETH spot ETFs, with a final deadline for multiple ETFs looming on May 23rd and 24th. This silence has only added to the anticipation and pressure on the SEC to decide on the deadline.
Parallels with Bitcoin ETF Approval
The path to approval for Ethereum spot ETFs mirrors the journey of Bitcoin ETFs. The SEC was largely quiet in the weeks leading up to the approval of Bitcoin ETFs, suggesting that a similar outcome could be possible for Ethereum. While the circumstances differ, the potential for approval later this week remains high despite the SEC’s current silence.
Analysts suggest that the speculation around the SEC’s decision to approve Ethereum spot ETFs has intensified following pro-crypto statements made by US presidential candidate Donald Trump earlier in May. This has led to speculation that President Joe Biden may feel compelled to make a pro-crypto move to garner support from the crypto community.
A spot Ethereum ETF would mark a significant milestone for crypto adoption, allowing a new wave of investors to access the token. This could potentially drive ETH to all-time highs above the $4,900 level. Crypto enthusiasts are bracing for increased volatility as the SEC’s response to the spot Ethereum ETF applications is awaited.
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Increased Interest in ETH Options
The impending decision has also heightened interest in weekly and monthly ETH options expiries. At Deribit, the leading derivatives exchange, Ether options open interest for May 24 stands at $867 million, while for May 31, it reaches an impressive $3.22 billion. CME’s monthly ETH options open interest is $259 million, with OKX at $229 million.
The speculation around the SEC’s potential approval of a spot Ethereum ETF has significantly impacted the market, driving up ETH prices and increasing interest in Ether options. As the final deadline approaches, all eyes are on the SEC to see if it will make a pro-crypto move, potentially setting a new precedent for the industry and further solidifying Ethereum’s place in the financial world